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  • #972849
    aussiesniper
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    Hey all,

    Fairly new sole trader here, would be great if someone can help me out with a credit account question :)

    A customer asked me for a credit application today, i am a manufacturing business and i usually take deposit for amounts such as over $1000, receive deposit then order material and start the job

    So i googled around and found some credit application forms where they usually just ask for some basic business info’s and accountant info, so my questions are:

    1) do i need some sort of softwares to run a credit database?
    2) what do i do once i have their info? give it to my accountant? what if i don’t have an accountant?
    3) can the customer avoid paying my deposit once i setup his credit account?
    4) why is it necessary/compulsory for businesses to have credit accounts? isn’t that just the same as 30day pay term?

    I am also i search for a budget accountant near Hurstville area :)

    thank you
    Leigh

    #1058218
    Credit Manager
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    Hi Leigh,
    The purpose of an account application form is to gather as much detail about your potential customer as possible, to enable you to decide if they will be a good risk.

    A basic application should ask;
    Structure of the business (sole trader, partnership, Pty Ltd, trust etc)
    Legal name
    Trading name
    Physical Address as well as postal address
    Contact details, phone, fax, email, website if they have one.
    Details of directors or partners
    Contact name for accounts payable

    Although not always reliable, there should be somewhere for the applicant to list at least 3 trade references for you to contact.
    There should also be a disclaimer just above where the applicant signs, stating that they have read and understand your terms and conditions, along with somewhere for them to sign their name, print their name, and date the application.

    Once obtained, this information should be retained on file somewhere, so that you know who to contact if a payment becomes overdue.

    Getting back to your questions,

    The software you use is entirely up to you and will depend upon the volume and detail of information you wish to hold. I get by with excel worksheets.

    You may wish to give information obtained from your application form to your accountant, but unless they are going to advise you on granting credit, i don’t see the point. Also be aware of privacy issues if the application contains personal info. It may be in breach of the act, if there is no privacy disclosure in your terms.

    If granted, a credit account will not negate the need for you to obtain a deposit if you wish.

    It is not necessary/compulsory for a business to offer credit accounts, it is the same as 30 day terms, however if you provide goods and or services to a value of more than $100, and reserve a payment date of over 7 days, you are providing credit by definition of the word.

    Hope this helps, i have a generic credit application form you can use, i tried to attach it here but exceeded size limit.
    Ping me an email and i can send it.

    Paul

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